Call to resolve syariah compliance differences

Call to resolve syariah compliance differences
By Kamarul YunusPublished: 2009/04/07



MALAYSIA'S aspiration to become an Islamic financial hub could be even brighter if it can resolve differences of opinion regarding syariah compliance, said Dr M. Kabir Hassan, a professor and financial economist at US-based University of New Orleans.

"At a first glance, I think the prospect (Malaysia becoming an Islamic financial hub) is very bright as the government is very supportive in terms of financial assistance as well as creating institutions for the industry.

"But at one point, there would be a tug-of-war between the Malaysian model and those of the Middle East. We have to resolve this syariah matter as that market is big in Malaysia," he told reporters after delivering a public lecture organised by Universiti Putra Malaysia (UPM) in Seri Kembangan yesterday. Kabir, who hails from Bangladesh, is also UPM's visiting scholar.

He said Islamic finance, which has been in practice over the last 30 years, comprises mainly short-term finance or "murabahah" (80 per cent), and long-term or "mudharabah musyarakah" (20 per cent).

"We need to get the mudharabah musyarakah type up to 80 per cent to get the real essence of Islamic finance," Kabir said, adding that this can achieved if there is continuous government support, more institutions and infrastructure as well as laws and regulations for the industry.

"We cannot simply copycat regulations of the conventional finance sector if we want this industry to grow. We need to think of our own regulations," he said.

Meanwhile, UPM deputy dean (thesis-based programme and research) Professor Dr Shamsher Mohamad Ramadili Mohd said the university plans to conduct Islamic financial research to address various issues concerning the implementation of syariah-compliant Islamic finance in Malaysia and the world.

He said Malaysia has already proven to the world that it is among the best in implementing and promoting Islamic finance.

"We are already the world's best, such as having the largest sukuk market in the world. We are also creating and developing more financial instruments and products," he said.